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Ethical Choices in Economics, Society and the Environment.

Siena, Italy May 5-6, 2006

Note: The full conference website is now available ethics.paricenter.com.

Conference Report

The Pari Center for New Learning and the Siena-based association EFA (Ethics, Economics and Environment) jointly hosted a conference held in Siena, May 5-6, 2006 and financed by the Monte dei Paschi bank. Following the meeting several of the speakers were invited to the village of Pari to participate in discussions with members of the community about local concerns and to work towards developing some practical proposals, including The Pari Network.

Participants included corporate managers, economic entrepreneurs, scientists, environmentalists and civil servants. The meeting sought to break free from the politics of disabling opposites - corporations versus anti-capitalists, globalization versus localism – and to focus on the ethics on each position. The tool it brought to the operating table was that of ethical choices. That ethics may be a tool to fashion economic paradigms for the 21st century is gaining currency; but how does one discipline operate on another, ethics on economics, how contingent or contextualized is their relationship?

The conference was divided into four sessions. The first dealing with spiritual and ethical issues of economics; the second with ethical issues in business and banking; the third with the experiments involving complementary currencies and issues in community and environment; the final session consisted of a round table discussion.

Edy Altes, a former Dutch ambassador to Spain emphasized the importance of a spiritual approach to economics and society. He claimed that one of the first consequences of a spiritual renewal - a greater awareness of man's place in Ultimate Reality - should be the critical examination of the present way of ‘handling economics’. Is ‘economics’ a goal in itself - as many think - or should it be seen as an instrument to serve the common good of mankind? Not only religious people but also adherents to other convictions of life share an awareness that ‘economics’ is not an ‘autonomous entity’ – ruled by absolute laws - but should be seen as part of a larger Whole. Indeed, the essence of economics is to serve man and society in such a way that all people can lead a decent existence, within the limits of nature!

Reality shows us however that ‘economics’ is now exactly operating the other way round: man and society are serving ‘economics’! The original concept of economics as an instrument for the common good, for man’s well being, is perverted into a goal in itself, facilitating the enrichment of a limited group of people. Religions, with their vast numbers of adherents spread all over the world, have a great potential to mobilize resources for the cause of a truly humane existence for all people on earth. Being faithful to their prophetic calling demands standing up whenever ‘the humane’ is threatened or the integrity of creation trampled upon. This is a responsibility for all religions, which should receive a high priority.

A sober overarching examination of globalization with its uncertainties and the dangers of short-termism was provided by Professor Alessandro Vercelli of the University of Siena. He compellingly criticized the commonly held economic dogma that the most effective way to combat poverty is to increase the overall size of the 'economic pie'. He showed impressive evidence of a strong correlation between modernization and increased economic inequality in the course of the last two centuries, a tendency that has shown a marked increase in highly developed countries like the US and the UK in the past thirty years. He further noticed an anti-correlation between inequality and health: the more unequal the distribution of wealth the lower the overall health condition of the population, even in spite of higher medical spending.

He finally claimed that the shortcomings of the process of modernization and the growing tendency to short-termism have progressively undermined the social responsibility of economic agents and organisations both private (in particular the firms) and public (in particular the state). He suggested that corporate social responsibility (CRS) can play a significant role in altering this state of affairs provided there is an active involvement on the part of individuals, organizations and public authorities. The measures required to establish an environment conducive to more social responsibility on the part of firms cannot be decided and implemented without an active concern of individuals. We should provide an environment that minimises the gap between individual self-interest and social interest. Since this gap cannot be completely eliminated, a socially responsible behaviour requires an ethical awareness and concern on the part of individuals strong enough to motivate choices that are not optimal from the point of view of immediate self-interest.

Within globalization, Ernesto Illy of Illy Coffee (www.illy.com) in his 'compass of ethics' illustrated the distinction between complex and complicated phenomenon: the complicated is linear, the sum of its parts, whilst complexity is non-linear, contains time, and is the mother of freedom and uncertainty. Whilst nature is complex, ethical rules can reduce uncertainty by making a key component, human behavior, more predictable and channeled. Ultimately Illy asserted that the market, whilst complex, is based on mutual respect and honesty, with consumers as selecting agents, and competition as selecting tool. If ecology is the science of the survival of life, we have to place our faith in the complexity of innovation, competition and elimination (creative destruction) of what is unsustainable; in the marketplace he suggested that what was unsustainable in the long term was what was unethical. Illy's stance was perhaps that the appliance of welfare and environmental concerns right along his work chain had enabled the company's enduring sustainability in the marketplace.

Geoffrey Bush of Diageo plc www.diageo.com (the world’s larges drinks conglomerate that owns Guinness, Seagram Whisky, Smirnoff and such) introduced the company's strategy for Corporate Social Responsibility - CSR - which he heads and whereby the Diageo plc now undertakes community-based projects as part of its corporate operations. CSR is indeed a snowballing phenomenon as corporations understand its value both in the market place and in political influence; an enlightened appliance of 'enlightened self interest'? In an imperfect world, a multinational company that practices CSR is far better than one that doesn't and thus is of far greater value to society at large. However the agriculturist Colin Tudge, author of 'So Shall We Reap', poignantly asked if a case could be made for the progressive dissolution of a giant conglomerate such as Diageo into a million local ones, all tied into their communities thereby dispensing with the need for CSR all together.

On the other hand “big is beautiful” - or necessary - had its advocates. Lord Stone of Blackheath, former CEO of Marks and Spenser emphasized the managerial capacity of corporate structure to guarantee outputs and jobs. The complexities of modern society with its dependency on sophisticated tools such as computer telecommunications networks may only be deliverable by the big.

For an agriculturist such as Tudge, envisioning what he calls a 'renaissance' of agriculture, the paradigm of production he urges is in strong contrast to the multinationals designs for this century. But what is the primary objective to address in this field; to increase profits or to increase production? Demographically the majority of farmers on this planet are peasant farmers living off the land of 1 acre plots or so. This cannot change for several generations without dire consequences for the planet; thus what is the best way forward? That they be brought into the global market economy or that the world produces enough for their needs? The answer to this being fought out through a War of ideas in parallel to the brutal reality of abject human misery. At the same time we are faced with global warming and its capacity to inflict environmental calamities. The urgency for balanced solutions is apparent. For defeatists, the thinking is that the Law of the jungle will only prevail; that the subject of contention - in this instance us, our planet and our future, will invariably be seized by the jaws of the mightiest, the Corporations, and be attended to solely on its own terms. But oddly the compass of ethics suggests another logic.

A graphic illustration of this was provided by Shanta Chatterji of the Bombay NGO, Clean Air Island, (www.peopleandplanet.net/doc.php?id=1040) with its attempt to clean up Bombay by vermicomposting all organic waste, and avoiding landfills and reversing decades of soil erosion brought on by the Green Revolution. The paradox is that such potential large-scale solutions could only have emerged from the initiative and local understanding of small social units in the form of NGOs. Its not so much that Big can be small but that Small can be big or rather, Bigger! This is a strategy that the city of Delhi is also showing in its attempt to be classified as a zero-waste city.

How the Big and the Small enmesh ethically to resolve the problems of today crystallized with the presentations on alternative and complimentary money. The universality of money is without dispute but today most money is created for speculation - 97% of it for short-term speculation - and all the money in circulation is created as interest bearing debt. In this form, economic growth as in the growth of money has no correlation with growth in nature of which we are a part. As Margrit Kennedy (http://www.margritkennedy.de/) has pointed out, a penny invested at the average rate of growth at the time of Christ would now be worth 9000 balls of gold each equal to the weight of the earth. Some of us may think that money is there in order for us to buy our needs and wants but that's not why it is produced. In the UK for instance 2/3rds of the money now in circulation was created as mortgage loans; in effect whilst houses in material form may be paid for and built many years ago, in reality more and more of them are owned by financial institutions like mortgage companies. We may use money but the money is there to serve another purpose.

Paul Glover of Ithica Hours in New York state (www.ithacahours.com/) provided an inspirational presentation about to bypass the money system altogether and provide essential goods and services especially to the poorest in the community. He printed his own money, in denominations of 1 hour, 2 hours, etc, with each hour being equivalent to $10 of regular money, and thus produced his own local currency. His success lay in getting his currency to be accepted by a variety of local institutions so the people could both be paid and could spend in Ithica hours money at a wide range of shops, even pay rent to their landlords, and yes, buy health care! Ithica hours recently also provided a community loan of $32000 to finance a community real estate development. And its all perfectly legal; after all money is a only a belief system nothing else. It would only work if we believe in it, or are compelled to do so.

Henk van Arkel of Social Trade Organisation, STRO (www.socialtrade.org) provided another system of complimentary money not tied to interest. Quoting Mervyn King's [the Governor of the Bank of England] prediction that 'the money monopoly will soon be over', STRO create 'self-contained circuits of exchange between producers and consumers' and provide incentives so that the currency they issue does not leave the circuit of exchange. The formula is that by maximizing the number of times the currency circulates within this circuit without leaving inevitably creates more local employment, more income and opportunities for local communities to improve their living conditions autonomously.

This preplanned circuit of producers and consumers philosophy is very different to that of getting your provisions at a supermarket where what is spent goes straight out of the community into the world of speculative capital. STRO have even produced their own complimentary money software Cyclos to enable e-connecting supply and demand and secure administration of mutual transactions. They are now operating in several countries with transactions worth many millions of dollars whilst enabling debt-free development and local self-sustainability at the same time.

Whilst bypassing the money system will invariably be a key instrument of change for agents both in civil social and government, the challenge is to use information technology to connect needs and wants in inventive ways and create new public services. And there are many ways as the Brazilian city of Curitaba has shown - here waste produced by each citizen may be traded directly for public transport vouchers or other provisions. The barter result is mutually beneficial. The lesson is that whilst money's growth may have been viral, we can design our future incrementally through the marriage of needs with needs and an appliance of ethical reciprocity. Whilst this may have nothing to do with economic growth, the responsibility to both invent such marriages and consummate them lies in effect in every citizen's hands. For its proponents it is logically maximizing both the potential solutions and their appliance in the real world. But this is difficult for the existing economic order to envisage or swallow for it amounts to diffusing the crisis.

On the day following the official conference several of the speakers and participants met in the village of Pari and spent the morning listening to the local inhabitants discuss how small, local communities hope to survive in a modern world. Following this, participants met for lunch and continued their discussion until the early evening. The general sense was that it was now time to move from ideas and proposals to something more practical and in response a number of suggestions were made. To further this aim we decided to create The Pari Network. This will be in the form of a double helix, one strand representing ideas, theories and proposals; the other promoting and fostering practical activities. This Network should be active in July 2006 and will have its own website. Further information about the Network and its practical activities will be posted shortly
 
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